Weathering the storm

August 2010

It's the second year of our e-learning top tables, and Clive Shepherd takes a look at how the market has fared over the last year and ventures an outlook.

In this second year of IT Training’s survey of e-learning companies, we have the great advantage of being able to make comparisons. How have particular companies fared in relation to their competitors and the market overall? In particular, how has e-learning benefited or suffered as a result of the harsh economic conditions?

The figures we report here are, by and large, for calendar year 2009, just when the fallout was at its worst from the crisis of October 2008, at least as far as the private sector was concerned. Forecasts were that many projects would be put on hold, but that e-learning could be a beneficiary overall as organisations looked to keep their learning and development (L&D) programmes going within much lower budgets. Let’s see what happened.

Bespoke content developers

In this category we look at those companies that design and develop tailored e-learning content to meet the particular customer requirements. This is a long-standing market, stretching back to the 1980s, with major players that in many cases have equally early foundations.

One exception to this rule is Kineo, less than five years old, but moving up this year from seventh in the table to second as a result of a 40 per cent rise in turnover when most of its competitors have remained static. Kineo is based in Brighton, but also has offices in Sheffield, Israel and the USA.

Kineo’s Steve Rayson explains how Kineo has managed to secure growth in an otherwise difficult market: ‘Our message about rapid e-learning has gained a lot of traction. We position ourselves at the lower cost end of the bespoke development space and concentrate on high quality at reasonable cost and with a fast turnaround. This broadly reflects what the market is looking for – nice looking content that is fit for purpose.’

Another effect of the recession has been organisations looking to beef up their in-house development, but with specialist help where required. Rayson explains: ‘We do a lot of work with internal teams at companies such as O2, McDonalds and HSBC. We fill in with the technical and creative skills and the extra capacity that it is typically uneconomic to maintain in-house.’

Rayson has also been conscious of an increasing demand for all-in-one solutions to training problems. ‘A lot of our clients are asking us to provide a simple LMS platform alongside their content. As Moodle specialists we can do the whole job.’

Heading the bespoke list for the second year running is London-based Line Communications, which is 21 years old this year. According to Director Sales and Marketing, Steve Ash, Line’s continuing sales success through the recession was down to careful strategic planning:

‘We took the decision 18 months ago to try and reduce our reliance on the public sector, given that we knew cuts were coming after the General Election. We conducted a drive to increase our presence in the corporate sector, and this has paid off in the strength of our current client list, which includes Anglo American, BP, BT and Ford. In the corporate sector, we have concentrated on obtaining business results for our customers, rather than on fancy graphics or rapid development. We adopt a more consultative, proposition-led approach, which sets us apart from many of our competitors.’

Line has over ten years’ experience working in the defence sector, which could now be seen as vulnerable with the impending cuts. Not so, says Ash: ‘Much of our work is critical to the performance of personnel operating in major theatres. This work is secure because success depends on it.’

Ash is also conscious of an increasingly international flavour to their work. ‘Most of our customers are UK-based, but our content is reaching a large global audience, which requires us to manage large amounts of localisation. It would also be fair to say that many of the projects we are asked to undertake are direct replacements for existing face-to-face programmes.’

Off-the-shelf content providers

Whereas bespoke content services tend to be delivered on a more localised basis, e-learning products have a world-wide market. While our top ten list for off-the-shelf content providers focuses on vendors with a significant UK presence, the revenues are global. Heading the list by a clear margin for the second year running is SkillSoft, a company with roots in both the USA and Ireland.

SkillSoft’s sales held up in tricky market conditions across the world. According to Kevin Young, SkillSoft’s General Manager for EMEA, ‘Hard times have strengthened our value proposition. Procurement departments are now much more active in determining training spend and they are challenging L&D departments to do more with less.’

Young has been aware of a shift in customer demand towards shorter, more informal types of e-learning content. ‘We have seen increasing interest in our Books24x7 service and in the Leadership Development Channel, which provides six-minute videos featuring top-line management thinkers for middle and senior managers. We also have been asked to provide our business skills offerings in much shorter one-hour chunks.’

A new entrant to the list of off-the-shelf content providers this year is Learning Pool, which specialises in providing content and learning platforms for the public sector. This position could seem precarious, but not so, says Paul McElvaney, one of Learning Pool’s founding directors:

‘Learning Pool provides a range of custom learning products to customers in the public sector, but it’s not just our content that makes us unique or successful. Our ability to build an active community around our services means that we have become the logical place for public sector organisations to come to help them reduce costs, increase efficiency and improve the capacity of their people - all crucial stuff in an environment of severe fiscal tightening.’

Authoring tool providers

With an increased emphasis on in-house development, it’s not surprising that those companies featured on our top five providers of authoring products should have witnessed growth over the past year.

While Adobe almost certainly dominates with its Captivate and Presenter products, for which no figures are available, other providers with a strong IT training bias have done particularly well. Behind US-based TechSmith, with its Camtasia and SnagIt products, for the second year running sits Assima, which has seen a 27 per cent growth.

According to Assima’s UK Managing Director, Paul Stevens, the USA was first to show the signs of pulling out of recession, with Europe relatively flat. He comments, ‘There’s no doubt that organisations are beginning to embrace technology more, not just for the cost savings, but because of the potential for quality gains. Compared to a single hit in a classroom, e-learning and performance support materials can provide much more flexible support over a continuing period. Employees can become more confident with IT systems more quickly.’

Stevens backs up his claims with reference to Becta’s February 2010 report ‘Delivering Results in the Workplace’, which contains a wealth of tangible evidence of e-learning success in UK organisations.

Stevens also points out that the biggest contracts won by Assima in 2009 were to replace existing face-to-face training programmes with e-learning. And there is increasing evidence to suggest that organisations are producing much of this new e-learning content in-house.

‘There is strong demand for our Assima Training Suite, which generates software sims with a learning component, and the Assima Performance Suite, which provides embedded support within applications. Customers are more confident that they can produce their own content, particularly with our training and guidance. After all, they have the business knowledge and this provides the content with greater credibility.’

LMS / LCMS providers

The table of LMS and LCMS providers has changed to some degree because some of the major US players have taken their companies private and no longer report their sales.

By some margin the leader in our revised table is Saba, which has seen growth in spite of the recession. Ian Baxter, Saba’s Director of Marketing, EMEA, comments: ‘Saba is one of the few public, profitable and cash flow positive companies in the corporate learning space. In Saba, customers get a long-term financially viable partner with a true global presence.’

Saba has been one of the first vendors to deliver a collaborative social learning solution to augment formal learning. They continue to innovate further by offering embedded social capabilities in all people processes, including performance reviews, succession planning, talent mobility and leadership development.

How does Saba respond to the possible threat from open source providers? Baxter explains, ‘While we see open source platforms in a few deals, most customers do not believe they get a global, scalable and configurable solution that is unified with other people processes. We believe the impact of open source platforms is very minimal in the enterprise LMS market.’

So what impact has the entry to the market of ERP (enterprise resource planning) vendors such as Oracle and SAP had on the fortunes of the specialist LMS providers?

‘There are a variety of myths that ERP vendors pervade such as they are “free” or that “integration” to the existing system is seamless or that “no upgrade is required,” but in all cases the myths have been debunked. The costs associated with trying to use a database vendor’s solution for people invariably results in more costs, less impact, longer times to implement on a least in class solution.’ Fighting talk.

And not forgetting...

As we noted last year, e-learning encompasses a very wide range of products and services, many of which have applications beyond learning and development. Without doubt the most significant of these is web conferencing, which is typically embraced first by organisations as a tool for online meetings, but which also has tremendous potential for learning and development.

Unfortunately, because web conferencing is dominated by major telecommunications and IT companies for whom it would be practically impossible to extract revenues that relate specifically to L&D, it is not possible for us to track the growth of web conferencing for training in these tables. However, we can be confident that the use of the ‘virtual classroom’ is definitely on the up in the UK, after a very slow start.

Why has web conferencing been so slow to take off in L&D? Well, firstly, many L&D professionals have been blissfully unaware until recently that such technology existed and IT departments haven’t helped them out in this respect. Perhaps through the increasing popularity of free public ‘webinars’ (web seminars) and the use of tools such as WebEx for everyday meetings, the secret is now out.

What remains to be achieved is an up-skilling of instructors and facilitators to overcome any initial fears and to make sure they make effective use of the platform, and then some good hard thinking about how virtual classroom sessions can be embedded into the L&D offering.

Perhaps even more noteworthy, at least in terms of the hype, has been the increasing corporate awareness of the potential significance of social media tools to enhance collaboration across organisations, improve corporate communications and support informal learning. In most cases, because of the wide implications of any changes to communications practice, the decision to embrace social media will be taken beyond the L&D department.

It may not even require any substantial investment in new software, as more recent versions of tools such as SharePoint are perfectly capable of supporting bottom-up and peer-to-peer collaboration. However, the barriers to the use of social media for learning are much more cultural than they are technological. It will take some time for command-and-control structures to be sufficiently freed up to make any meaningful use of social media a reality in many organisations.

Looking ahead

As I said in my column in the summer issue of IT Training, the learning and development profession is at a crossroads. For many organisations, the enormous uncertainty brought about by the credit crunch left them temporarily paralysed and unsure of which way to turn while they assessed the damage.

In most cases and with all fingers and toes crossed, it looks like we’ve turned a corner and the private sector in particular is beginning to make decisions about how they want L&D to look in the future. In many cases the picture they are painting is very different from what went before.

In some respects it can be viewed as surprising that the various sectors of the e-learning market have held up so well during this crisis. Very few major players have experienced significant downturns in their fortunes and some have continued to expand.

As the economy starts to move again, e-learning will almost certainly continue to grow as a share of the overall L&D spend. If there is a caution, it is that the makeup of the e-learning mix is shifting and that this could cause some structural change in the industry.

Expect to see more in-house development, a more rapid design and development process, a greater use of virtual classrooms, more use of collaborative and web 2.0 tools and delivery that makes better use of the capabilities of smart phones and tablets. One thing is for sure: the only constant will be change.